Question: Dale on Twitter wants to know what interest-only mortgage payments are. Are they a good idea?
Answer: It means you’re paying only the interest, and you’re not paying off any of what you owe. Translation: You’ll be in debt the rest of your life. No, that’s not a good idea. Interest-only mortgages are a really bad idea. “I’m going to take out an interest-only mortgage, and then I’m going to really chunk on the principal.” Why not just take out a good 15-year fixed and chunk on the principal? Everybody’s got all these ideas how they’re somehow going to trick the system. The system is big, freaking, hairy payments pay off the debt. That’s the system. That’s what really works. Really, nothing else does.
Interest-only mortgages are a good thing to stay away from completely and permanently. We recommend only a 15-year or less fixed rate—no adjustable rate mortgages—and this is a great time to refinance. Your 15-year fixed rates right now with one point are down under 3%. It is absolutely one of the best times ever to refinance. Get on the phone to Churchill Mortgage. Get rid of adjustable rate mortgages. Get rid of higher fixed rate mortgages. Get rid of mortgages with balloons and mortgages with calls. It’s time to clean up.